Thursday, 19 January 2023
Ceisteanna Eile - Other Questions
Capital Expenditure Programme
My question relates to cost overruns, which have been an issue for some time. What will the Minister do in his new role as Minister for Public Expenditure and Reform to ensure there are no cost overruns of major public works?
The Government has committed to €165 billion in capital investment through the NDP, as published in 2021. As a percentage of national income, annual capital investment is now among the largest in the European Union. In 2023, almost €12 billion will fund vital infrastructure in areas such as housing, transport, education, enterprise, sport and climate action. Achieving value for money and reducing cost and schedule overruns is a vital part of delivering the NDP.
My Department is responsible for the public spending code. I was the Minister for Public Expenditure and Reform when the last set of changes were made to that code. I hope the Deputy is aware that the majority of public investment projects are delivered on budget and on time. There is a high level of professionalism across sectors. However, noting the higher risk profile of larger projects, new procedures were required in order to improve project out-turns, to avoid cost overruns and to avoid delays to project delivery.
Responding to this need, my Department put in place the external assurance process, EAP, to provide independent scrutiny for major public capital projects. This involves independent expert reviews at two key stages in the project life cycle under the public spending code. The purpose of the EAP is to improve value for money and to support funding Departments with expert insight relating to project risks.
The major projects advisory group, MPAG, was also established by my Department. The MPAG allows us to better understand the outputs from the external reviews, and help with the decisions around major capital projects. For example, MPAG has now completed reviews of four major project proposals; BusConnects; MetroLink; Clonburris urban regeneration development fund spending; and elective care centres proposed for Cork and Galway.
The Minister's predecessor, Deputy Michael McGrath, prior to him becoming the Minister for Public Expenditure and Reform, stated that when it came to capital projects there was a clear pattern of projects costing more than the agreed contract price. He said that we need to know why so many projects end up costing taxpayers far more than planned. The Minister knows that when it comes to cost overruns on capital projects, we are largely in the dark. We are aware the cost overruns can arise a result of poor planning on the part of the contracting authority or the contractor, litigation arising from contractual disputes, poor performance in the management of risks, and so on. We do not know how such things impact on individual projects or in the aggregate. Will the Minister commit to begin the process of collecting this kind of data so we have a better overview?
I understand that a lot of this information is available for individual projects. I will certainly look at the point being made by the Deputy on how this can be better tracked in an overall fashion. I am aware, for example from challenges with the national children's hospital number of years ago, of the need for a refined public spending procedure for very large projects. I understand the need for that. I am very much aware that for some of our larger projects, a very high level of scrutiny is needed regarding how the country's money is spent. I will have a look at the role of the public spending code to ensure it continues to deliver the scrutiny we need for value for money. I will look at the Deputy's point on how we can aggregate information to see if we can gain any insight regarding common factors that could be slowing down the delivery of projects in the NDP.
I will bring forward legislation this year on the matter. I hope we can work constructively on that.
That legislation is designed to bring greater transparency and social value to public procurement. The Government's own recent White Paper on industrial policy stated that it wants to use public procurement in a strategic way. We will not be able to use the system in a strategic way unless we are gathering the data which would put us in a position to strategise. I would hope that we can work on that. If we are not using our public procurement in a strategic way for the benefit of everybody, we are not making the most of that money or that return.
I want to ask the Minister one last time about the controversies of the last week as it is my last opportunity. Did Michael Stone pay people to put up posters for the Minister in the 2020 general election?
As I said on the NDP, I want to look at what other improvements or changes we can put in place that get the balance right between the effective use of taxpayers' money and all the scrutiny that is needed for all projects, particularly larger capital projects.
On the Deputy's final point, on that and other matters I look forward to making a statement to the House at the earliest opportunity.